Lundin Gold Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 9, 2024

There are 8 speakers on the call.

Operator

Good afternoon, ladies and gentlemen, and welcome to the London Gold's First Quarter of 2024 Results Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will request your This call is being recorded today, May 9, 2024. I would now like to turn the conference over to Ron Hutchstein. Please go ahead.

Speaker 1

Thank you, Lester, and good morning or afternoon, everyone. Thank you all for joining us on this slightly later than usual conference call today where Terry Smith, Chief Operating Officer Chris Cololian, Chief Financial Officer and I are going to take you through our results for the Q1 of 2024. Please note Lending Gold's disclaimer is 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.

Speaker 1

Lending Gold is a U. S. Dollar reporting entity and all amounts in this presentation refer to U. S. Dollars unless otherwise indicated.

Speaker 1

Lending gold has kicked off 2024 with 1st quarter gold production of over 111,500 ounces and gold sales of just under 109,000 ounces at a cash operating cost of $7.35 per ounce sold and all in sustaining cost of $8.68 per ounce sold. These results are a great indication of things to come and put the company firmly on track to meet its production guidance of 450,000 to 500,000 ounces and an all in sustaining cost guidance of $820 to $8.90 per ounce for the year. Bolstered by this strong operating performance, reduced debt servicing costs and record high gold prices, lending gold generated in excess of $100,000,000 cash from operating activities and free cash flow of $82,000,000 during the Q1. An important milestone achieved during the quarter was Lending Gold's announcement of its updated estimate of mineral resources and mineral reserves. With this update, the company has grown FDM's reserves since operations began, adding approximately 2,600,000 ounces before mining depletion.

Speaker 1

This kind of success is only possible with an asset of exceptional quality like FDM and a strong geology team. Our 2023 conversion drilling program has enabled us to grow our measured and indicated resources and the near mine program has also provided additions to our inferred resources. Based on planned conversion and exploration programs for 2024, I'm very excited for the potential to add more ounces to and around FDM over the coming year. Terry will go into a little more detail about the updated estimate later in this call. Exploration activities in 2024 have also got off to a great start and continue to yield positive results.

Speaker 1

Over 12,330 meters of drilling across 26 holes were completed on the near mine program in the Q1. There were several exciting results at depth and on Bonso Sur, But the most intriguing and exciting is a new high grade zone we call FDN East, just to the east of the FDN resource. 2024 will be the largest drilling program ever conducted on the land package that hosts FTN and we're all very excited about its potential. As you are well aware, the key priority in 2023 was to clean up our balance sheet. In Q1 2023, we elected to repay in full the 10 remaining quarterly installments of the gold prepay facility for 208,000,000 dollars And in Q4, we fully repaid the remaining balance under the senior debt facility of 72,000,000 dollars In line with this, after the end of Q1 of this year, Funding Vault announced that we have come to an agreement with Newmont to buy a 100% of the balance of the Stream credit facility and offtake agreement for 330,000,000 dollars The negotiated purchase price is payable in cash with the first tranche of $180,000,000 due upon closing of the transaction, which is targeted for June 28.

Speaker 1

And the final tranche of $150,000,000 is due by the end of the 3rd quarter. Our final payment on the stream will be in June with a very healthy cash balance of $324,000,000 at the end of the first quarter and continued strong cash flow generation expected, Lending Gold will have no issues meeting these obligations. With this milestone complete, Lending Gold will have repaid in full all of its project debt only 40 years after achieving commercial production at Fruta del Marte. Between 20212023, Lending Gold generated close to 1 point $4,000,000,000 of cash from operating activities. Over that same period, Lending Gold has made scheduled payments under the project financing package of over 600,000,000 dollars which meant 45% of cash from operating activities were paid to our lenders.

Speaker 1

That excludes the voluntary early repayments of the gold prepay facility and the senior debt facility. After the buyout of the stream for $330,000,000 Lending Gold will be free of any obligations to our previous debtors. In other words, 100 percent of our cash flow will be attributable to shareholders. The company will have full exposure to rising gold prices, resulting in increased amounts of free cash flow to support capital allocation initiatives, including further growth and shareholder returns. On that note, before I turn the call over, I want to comment on some incorrect news out this morning on Bloomberg regarding our dividend.

Speaker 1

We have not cut our dividend and are in fact reviewing our policy to evaluate a potential increase in our dividend. With that, I'd now like to turn the call over to Terry.

Speaker 2

Thanks, Ron, and hello all. Another strong start to the year for Lending Gold and one we intend to continue building from over the coming quarters. Our operating results in Q1 were highlighted by quarterly gold production totaling approximately 112,000 ounces with gold sales of about 109,000 ounces. In the same period last year, gold production and sales totaled roughly 140,000 and 134,000 ounces respectively. Production in Q1 2023 benefited from some exceptional high grade mined late in 2022 early 2023 followed by lower grades through the balance of the year.

Speaker 2

In 2024, we see the reverse with production weighted towards the second half of the year. Mine production was close to 420,000 tonnes of ore at an average grade of 9.5 grams per tonne. The mill processed about 414,000 tonnes of ore at an average throughput rate of 4,545 tons per day, which is consistent with the throughput rate achieved during the previous quarter and in line with the throughput target set at the start of the year of 4,500 tonnes per day. Recovery was 88.3% for the quarter, which is slightly lower than our full year guidance, but in line with expectations. As we've stated before, average grades and recoveries will vary during the year with mill grades expected to increase incrementally over the remaining quarters.

Speaker 2

As part of our plant expansion project, the new Jamieson cells will help recoveries of the finely disseminated ore that we've encountered. Beyond installing these units, we've been busy developing a deeper understanding of FTN's geology and how it impacts metallurgical performance with several test programs, which have led to some improvements in the way we operate. Construction of the plant expansion commenced in Q1 with the new tailings and reclaim lines. We expect construction activities to ramp up through Q2 as civil and structural work gets underway and detailed engineering will wrap up. Procurement of the 3rd concentrate filter and other equipment included in the project are on track.

Speaker 2

The project remains on schedule for completion by the end of this year as we look ahead to running at 5,000 tonnes per day with stronger recoveries. Q1 was another strong period of low costs at FTN. Cash operating costs and all in sustaining costs in the Q1 were $7.35 $8.68 per ounce per ounce of gold sold respectively, which are both in line with expectations. Cash operating costs were at the upper end of guidance as a result of lower gold production resulting from expected lower grades and recoveries, while lower than anticipated sustaining capital activities during the quarter reduced all in sustaining costs. Sustaining capital expenditures accounted for $65 per ounce in the Q1, which was lower than expected with activities focused on completing projects, including the implementation of a mine dispatch system and the upgrade of the surface haul road from the mine to the ore stockpile area.

Speaker 2

FDM undoubtedly provides great exposure to the current strong gold price as illustrated on Slide 11. In 2023, Lending Gold's operating cash flow margin of 58% was significantly higher than the peer group average of 37%. While other companies in the gold space have been wrestling with cost inflation pressures, Lundin Gold continues to benefit from a number of structural advantages that results in our costs remaining quite sticky, which is a function of our high grade ore body and attractive operating environment in Ecuador. Going forward with no debt on our balance sheet and modest CapEx to sustain and grow operations, we are in a great position to take advantage of these rising gold prices to drive significant value from further growth and shareholder returns. Our ability to maintain high production and low cost is illustrated in our previously announced 3 year outlook.

Speaker 2

Looking to the future, 2024 gold production at FDN is projected to be between 450,000 to 500,000 ounces based on an average throughput rate of 4,500 tons per day, average recoveries of 89% and average head grade of 9.9 grams per ton. Cash operating costs are estimated to average between $6.80 $7.40 per ounce of gold sold in 2024 and all in sustaining cost is expected to average between $8.20 $8.90 per ounce of gold sold based on an assumed gold price of $1900 per ounce and silver price of $22.50 per ounce that factor into government royalties with all in sustaining costs. Sustaining capital will be lower this year compared to last because the construction of the 5th tailings raise is not scheduled until 2025. For 2025 and 2026, not only do we expect an increase in production, but we also expect cost to trend downwards over time. As everyone is aware, the conversion drilling program is a component of sustaining capital.

Speaker 2

Conversion drilling in 2023 enabled the company to increase its estimates of mineral reserves at FTN to 5,500,000 ounces, while also maintaining mineral resource totals year over year. Increases to the reserve estimate are primarily due to successful conversion drilling, modifications to the mine design and some changes to technical parameters. Mine design modifications included a higher proportion of long hole mining versus drift and fill and improvements in mining dilution and recovery estimates. Technical parameter modifications included very minor changes in cutoff grade estimates and notably higher mill recoveries, which are expected after the process plant expansion is completed later this year. The reserve gold price used for calculation of reserve cutoff grade of $1400 an ounce is unchanged from the previous year.

Speaker 2

Conversion Drilling has also successfully reclassified inferred resources to indicated in areas immediately beyond the current reserve boundary and totaled 0.35000000 ounces of new inferred resources were also added driving year over year increase in measured and indicated resources. Convergent drilling in 2024 has begun and a total of 3,710 meters across 30 holes were completed during the Q1. Results continue to confirm mineralization at FDM with high grade drilling intercepts associated to breccias and stockwork zones like the mineralization found in the North sector of the mineral reserve envelope. 2 rigs are currently turning under the conversion program. With that, I'll turn the call back to Ron to discuss our exploration programs.

Speaker 1

Thanks, Terry. During the Q1, Lundingold completed a total of 12,331 meters of near mine exploration drilling across 26 holes from surface and underground. The surface drilling program continued to test sectors located along the extensions of the Lease East Fault where Bonso Sur and other prospective sectors like the new FDN East Discovery and FDN North are located. At Bonso Sur, 8 surface drill holes were completed. Recent results confirm higher grade intercepts at shallower depths.

Speaker 1

Mineralization has already been identified for more than 1.3 kilometers along the north south strike and for at least 500 meters along the down dip and remains open in all directions. At FDN East, a new mineralized epithermal system was discovered. The target is hosted in similar volcanic and intrusive rocks to those found at the FDM deposit and is buried by sedimentary cover. 4 drill holes were completed during the Q1 and all intercepted gold mineralization associated with significant levels of hydrothermal alteration. 10 drill holes were also completed as part of a near mine systematic exploratory drilling program to test new unexplored areas close to FDM.

Speaker 1

As part of this, in the north extension of the FDM deposit, exploratory holes intercepted large zones of hydrothermal alteration. While at Alejandro, located along the south extension of the East Fault, 2 drill holes were completed with results still pending. The discovery of FDM East and positive results in the north extension of FDM dispel the previous theory that FDM was closed off to the North and East. Based on what we're seeing today, it looks as though FDM is in fact open in all directions and at depth, which is extremely exciting. Drilling from underground mainly explores extensions of the mineral envelope at depth.

Speaker 1

4 drill holes were completed in the Q1 with results continuing to indicate gold mineralization associated with zones of hydrothermal alteration of a similar composition to that found at shallower levels of the mine. These results underscore the potential to expand FDM's current mineral envelope at depth. A complete table of results received to date from the conversion and exploration programs can be found in Lending Gold's recently published press release dated April 17, 2024. Lundingold's largest ever exploration program is continuing to demonstrate the significant untapped exploration potential near in and around FDM. The 2024 Near Mine Program has a budget of $30,000,000 and will drill 46,000 meters.

Speaker 1

The regional program also continues to advance the identification of important indicators that point toward the presence of buried epithermal deposits in the Southern Basin. The 2024 Regional Exploration Program has a budget of $12,000,000 to drill a total of 10,000 meters. New sectors have been identified along the south border of the Suarez Basin, which hosts the Robles and Lupita targets. The regional drilling program commenced at the Robles target in April. Detailed geological interpretation of exploration data and additional field work were completed and aimed at identifying major structures and zones of hypothermal alteration.

Speaker 1

I'll now turn the call over to C. K. To provide a more detailed look at the financial results.

Speaker 3

Thanks Ron and good morning everyone. In the Q1 of 2024, Lundin Gold recognized revenues of $227,000,000 from the sale of approximately 109,000 ounces of gold at an average realized gold price of $2,141 per ounce. Income from mining operations was $113,000,000 compared to 133,000,000 dollars a year earlier primarily a result of the lower gold ounces sold during the quarter. From this Lending Gold generated adjusted earnings which exclude a one time special tax levy by the government of Ecuador, the derivative loss and related deferred income tax expense included net income of $58,000,000 or $0.24 per share this quarter compared to $67,000,000 or $0.28 per share a year earlier. Adjusted EBITDA was $131,000,000 in the first quarter.

Speaker 3

Lundin Gold's story is underpinned by sustained and continuing generation of substantial cash flow and the Q1 was no different. Lundin Gold generated net cash from operating activities of $108,000,000 in Q1 and free cash flow of $82,000,000 or $0.35 per share compared to negative $12,000,000 or negative $0.05 per share a year earlier. Results this time last year were impacted by the full repayment of the gold prepay facility. We expect to continue generating significant free cash flow in the future based on our production and all in sustaining cost guidance, especially given increased exposure to strong gold prices with the benefit of the full repayment of the gold prepay and senior debt and now the buyout of 100 percent of the stream. Lending Gold's balance sheet is now better than ever.

Speaker 3

As at March 31, the company had cash of $324,000,000 and a working capital balance of $414,000,000 compared to cash of $2.68 and working capital of $3.47 at December 31, 2023. Since then however, as Ron mentioned earlier, we have come to an agreement with Newmont to buy out 100% of the balance of the stream and off take for $330,000,000 Our current cash balance and future cash flows will more than cover the cost of the transaction. Upon completion, Lending Gold will be debt free and have more exposure to increasing amounts of free cash flow, leaving scope for increased investments into growth, increased shareholder returns or both. As mentioned previously, we will be reviewing our dividend policy in the second half of this year with an expectation of increasing the dividend. On the growth front, we see tremendous opportunity organically with our successful near mine exploration program, which could lead to investments into new satellite deposits.

Speaker 3

And then as ever, we continue to assess the M and A landscape. A huge milestone reach for Lundin Gold, which provides us with even more opportunities to grow. Very exciting times ahead indeed. For a more detailed discussion of our financial results, I encourage you to turn to the MD and A. Now I'd like to turn the call back over to Ron for his concluding remarks.

Speaker 1

Thank you, C. K. The Q1 certainly provides a strong foundation for the rest of the year and Lundin Gold's production and cost guidance remain unchanged as a result. Production is expected to be higher during the second half of the year, driven by planned increases in grades and recoveries. Further, the process plant expansion project to increase plant throughput to 5,000 tonne per day and improve metallurgical recoveries with the addition of the Jameson Cell technology remains on track for completion by the end of 2024.

Speaker 1

The NEAR mine drilling program continues to explore Bonso Sur where the primary focus is to better understand the targets mineralized zones through reduced drilling spacing as well as expanding the system along the north extension of the target and at depth. At the new FDN, the East Discovery 2 rigs will focus on expanding the initial positive results achieved to gain a better understanding of the mineralized zones and the main geological controls. 1 underground rig is expected to continue to test extension of the FDM mineral envelope at depth. One surface rig is planned to continue to test unexplored areas around FDM targeting new discoveries. The regional drilling program has been restarted with 1 surface rig testing the Robles and Lupita targets in the Southern Basin.

Speaker 1

We have added an underground rig and now have 10 rigs, 7 surface rigs and 3 rigs underground, which are currently turning across the conversion, near mine and regional programs with a minimum of 65,000 meters of drilling planned in 2024, once again a minimum. The estimated exploration budget is 42,000,000 dollars Finally, I can't finish without mentioning Lending Gold's dividend. The company anticipates continuing to declare quarterly dividends of at least $0.10 per share declared on a quarterly basis, which is equivalent to approximately $100,000,000 annually. As mentioned previously, we will be reviewing our dividend policy in the second half of this year. We are in a great financial position.

Speaker 1

We continue to generate significant cash and we are now strongly focused on growth. Operational excellence enables strong cash flow generation, which in turn gives us the ability to grow, all built on a strong foundation of ESG. All in all, a great start to 2024 and a base from which we will continue to build. As always, I'm proud of the team for all their hard work this quarter and look forward to the rest of this year. Thank you all once again for your continued support.

Speaker 1

And with that, I'll now turn the call over to questions. Lester, over to you.

Operator

Thank you. Ladies and gentlemen, we will now conduct the question and answer Your first question comes from Ross Adams from CIBC Capital Markets. Your line is now open.

Speaker 4

Thank you, operator, and thank you Lundin Gold for the presentation. I have a couple for CK and a couple for Terry. So for CK, I was going to ask on the dividend, but Ron you cleared that up at the top of the call. So as expected, the dividend revision is a potential increase once the balance sheet is debt free. On that topic, if you could be a little forward looking to later this year, do you think the bookends for a new dividend might be?

Speaker 4

I assume 1 and the low end would be keeping it at $0.10 a quarter. Do you have a ceiling or upper limit that you think would be used in the dividend review? And then the second one for CK is, I wanted to ask on the G and A costs. Q1 looked like step higher. Is that the new run rate or were there one time costs in this period?

Speaker 1

I'll take the first one, Bryce. Thanks for the questions. In terms of yes, it's not a cut. It's the dividend policy is at bare minimum maintained in terms of a ceiling. That's actually one of the things we're talking with the Board today in our strategy session and just stay tuned.

Speaker 1

On the G and A, C.

Speaker 3

K? On the G and A, Bryce, that's a higher level than what we would see going forward. There were a couple of one offs in these results, namely we mentioned there's the one time Ecuador special levy. So that's in there. And then also looking at some of the share based compensation, which was paid out in cash rather than incurring additional dilution.

Speaker 3

So I wouldn't see that necessarily as a sustained level going forward.

Speaker 4

Okay. Thanks. Terry, unit costs look pretty stable and it's easy for us to back into the total mine site cost per ton. Can you talk to a split between mining, milling and G and A dollars per ton, not dollars per ounces? And are there any plans to report on those metrics in the future?

Speaker 2

Thanks for the question, Bryce. Well, we haven't really talked about providing more detail on a unit cost basis. I don't see our Q1 cost being very different from what we had on a unit basis in our reserves release a month or so ago. Is that helpful?

Speaker 4

Yes, I can go and use those numbers if they're within a couple of percentage points of that, that's fair. But I thought if you had actual results from the quarter, that might be useful, but I don't want to make it public to understand that.

Speaker 2

Yes. That's good feedback. We'll take that on board.

Speaker 4

All right. That's it for me. Thanks so much.

Speaker 1

Thanks,

Operator

Faiz. Your next question comes from Don DeMarco from National Bank Financial. Your line is now open.

Speaker 5

Thank you, operator, and good morning, Ron and team. First off, congratulations on becoming debt free and another strong quarter. So first question, so we see you're seeing some good results at bonds with Sur, Afghan, Yithend regionally. So if we take a step back and look at big picture here, what's the vision if near mine resources are proven out? I mean, would it be to extend mine life, potentially create a generational asset or maybe increase throughput beyond 5,000 tons per day and then mine concurrently with FDM?

Speaker 1

I think, Dom, we're certainly working towards just continuing to add replace depletion at a bare minimum and a bit more ideally. But yes, based on the success we're seeing at Bonso Sur, that's one of the things that Terry and the team have been working on is looking at a what if scenario and ultimate capacity of our tailings facility, which we're already working, doing work on to provide to enable us to take advantage of that ultimate capacity. And then, yes, what's next in terms of the next step function for the mill. So for us, for us right now, what we're seeing at Bonso Sur and FD and East and that where we are starting to look at, okay, what if what's past what's the next step past 5,500 and how do we get there?

Speaker 5

Right. Okay. And actually my question was on the TMS. I mean, what do you have like a conceptual upper limit to its capacity? I mean, how much does I presume it covers you have expansion capacity for the rest of the defined mine life and reserves, but how far beyond that could you go before maybe you'd have to look at other options?

Speaker 2

Good question, Don. It's something we've been working on. We see the tailings facility having significant capacity expansion potential beyond what was conceived in the original design. So we're just working through that and actually getting permits aligned with that. We have capacity into the 2030s with our current facility as it's been planned.

Speaker 2

And as that facility is fully expanded, we're well into the 2040s with that facility.

Speaker 1

That's a good point. We're actually moving the permit. We're in the process of getting that permitted done.

Speaker 5

Yes. Okay. Okay. Yes. So that's really a long term consideration.

Speaker 5

Nothing no near term risk there. Okay. Well, that sounds great. Good luck with continued drilling. A lot of exploration.

Speaker 5

Look for some catalysts on that front coming forward. That's all for me. Thanks,

Operator

Your next question is from Kerry Smith from Haywood. Your line is now open.

Speaker 6

Thanks, operator. Ron or maybe Terry, you had mentioned that the mill expansion was on schedule. You didn't talk about the budget, the CapEx spend. Is it roughly tracking in line with what you expected?

Speaker 2

It is, Carey. Yes, we don't see any issues with the cost at this stage.

Speaker 6

Okay, great. And when you tie in the new mill for the 5,000 tons a day, are you expecting any significant downtime in terms of mill tonnages for, say, a 7 day period or a 14 day period? Or will you be able to kind of schedule this so that you don't really have much in the way of disruptions on your milk throughput on a daily basis?

Speaker 2

We're there's a lot of tie ins with this mill expansion, but they're all relatively small tie and we schedule the mill to go down for 12 hours every month. And we feel like if we can get organized, we can complete segments of these tie ins while we're down on a scheduled basis and not really need to extend much beyond that. So the construction team is just sort of getting organized around these tying campaigns and so far, we're not seeing any need for extended downtime.

Speaker 6

Okay. Okay, that's perfect. That's helpful. And then the last question maybe for Ron just on Bryce's question about the dividend sort of the bracket if you will. If you were to think about it in terms of say, a percentage of free cash flow in terms of the dividend payout, could you provide or some other metric like that that might help to give us a sense for what the top range might be?

Speaker 3

Hi, Carrie. I can take that one. We do have a clearly stated policy, which is effectively no more than 50% of operating cash flow less CapEx. So I think that's the policy in place. But as Ron mentioned, given the very strong free cash flow profile going forwards, once the streams paid off, we're going to be looking at revising the policy and upward change the dividend.

Speaker 6

Okay. So right now it's no more than 50% of operating cash flow less just sustaining CapEx, right?

Speaker 3

All CapEx, which this year is assuming the expansion project, but then going forward, it's effectively sustaining CapEx.

Speaker 6

Okay, right. And then that could be modified once you're debt free and okay, got it. Perfect. Thanks very much guys and congrats.

Speaker 7

Thank you.

Operator

Our next question comes from Terence Orknoelan from TSO and Associates. Your line is now open.

Speaker 7

Good morning, Terry or Arcelyn. Ron, I know the catastrophe is closed in Ecuador for a while now, and you got a fairly significant ground position. But if catastrophe were to open, would you augment your ground position given the, appetizing results that you have to exploration?

Speaker 1

Hi, Terry. Based on what we've got right now, no, we've got a phenomenal ground position that was part of the original acquisition package with Kinross and we cover everything we know right now as the very most prospective areas. And so we're in a good situation, which as long as the catastrophe is closed, we're just keep we're charging ahead. And but so yes, I don't think it's for us, the catastrophe being closed isn't hurting us. And once it opens, it's more for the industry overall in Ecuador than us.

Speaker 1

We've got lots in front of us, a really good runway.

Speaker 7

Okay. Thanks for that, Ron. Second question I have is, is share buyback as part of the option you may consider in the future with the excess cash flow management, let's say? No. Only dividends?

Speaker 1

Yes. The answer is no. And we've talked about this before. The part of the issue, Terrence, for us is it's more we're better off focused on dividends for shareholder return. A share buyback program really doesn't work for us given that we've got 59% of our shares held by 2 shareholders, Newmont and the Lending Family Trust.

Speaker 1

So we don't have a big float. We've recently I guess not recently 6 months or so ago, we got on the or longer on the TSX index and part of that was is very key measure for that is the float. And it's also one of the reasons why we're not on the GDX, even though we meet a lot of the criteria, it's because of the float. So share buyback for us is really isn't in the cards.

Speaker 7

Thank you, Ram, for that. I have one more question. The you're going to be in the enviable league of the gold mining companies in Canadian history whereby your class of assets and as well as the grades and so on makes it very difficult to acquire. I call it quickly, Campbell Red Lake and Hemlo, for instance. They could never actually make the proper acquisition because the mother company being so triple tier, okay, one asset class.

Speaker 7

So, I mean, there are a lot of companies that you can acquire or merge with, which will never be going to be in the class that I can think of, of the size as well of where you are. It's very difficult to structure that. I think that's what Campbell, Red Lake and handle kind of failed in history. They couldn't move much beyond their perimeter. So is it possible that, let's say, like dividend policy, for instance, maybe structured in such a way that people recognize the asset value of Fudo del Norte, but the upcoming one in the asset class that you have already made do deal with, I'm sure it's not going to be very likely it's not going to be the same class as you are.

Speaker 7

So how do you treat that? Because no matter how you look at it, there's going to be some sort of a dilution for the value of the company.

Speaker 1

Terry, it's a good point. We do know that Fruta is an amazing asset, but he is. You never stop looking. You never stop looking for opportunities. And I think that's where the Lundin Group overall have been extremely successful in finding opportunities where others may not have seen them or whether it's assets, whether it's companies, however, and being looking at things creatively and being patient.

Speaker 1

And so for we don't say it's not going to happen. We say we continue to look for opportunities and that's the way we see it.

Speaker 3

Sarah, I might add to that. You're agreed that obviously FDN is a phenomenal asset and there's a high bar in terms of finding something that can sit next to it. So we certainly hold ourselves to that high bar. However, your comment about dilution to value, I would say that there's tremendous value. We do see M and A as an opportunity.

Speaker 3

And the levers that we have on as a company in terms of our skill sets, whether it's operational excellence, whether it's exploration or ESG leadership, we do see the opportunity to redeploy those skill sets into new opportunities to unlock additional value for our shareholders.

Speaker 7

Okay. Fair enough. Again, thank you Ron and the team, Terry and so on, And we can go with all the good things for the shareholders. Thanks again.

Operator

Your next question comes from Cara Smith from Haywood. Your line is now open.

Speaker 6

Okay, thanks. I just had a follow-up for Terry. Terry, in the mine plan, what would be the rough split between the percentage of the muck that you're pulling underground from the drift and fill versus the stoping?

Speaker 2

That's a good question. I want to say it's 90%

Speaker 1

long haul, 10% drift and fill right now. Yes. Remember, Kerry, when we reggie started, it was about sixty-forty. And we keep drilling in the areas as we get closer to them and the geotech is a lot better than what was originally anticipated. So we've been able I think right now the only part that's stripped and filled is actually the crown pillar, isn't it?

Speaker 1

Yes.

Speaker 2

Terry? Yes.

Speaker 6

Okay. So you're thinking that ratio is probably going to be a reasonable ratio on go forward basis then?

Speaker 2

Yes, that's correct.

Speaker 6

Okay, great. Thank you. Appreciate it.

Operator

There are no further questions at this time. Mr. Ron, please proceed with your closing remarks.

Speaker 1

Thank you, Lester. Thank you everyone for taking part and attending the Q1 conference call and please stay tuned for additional exploration results as the drills keep turning. As I said, we're now up to 10 rigs and they continue to push Andre to see if we can't get more going. So it's a very exciting time for Lending Gold and the operations and the team at site continue to do a great job. You everyone and have a great day.

Operator

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.

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Lundin Gold Q1 2024
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