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Lundin Gold Sees a Much Longer Growth Story at Fruta del Norte | Jamie Beck · Kitco MINING

• 0:00
  SPEAKER_02: Kitco Mining on-site coverage of Mining Forum Americas is presented by Metalla Royalty and streaming.
• 0:10
  SPEAKER_00: FDN's bounty continues to grow.
• 0:12
  SPEAKER_00: Hello and welcome to Kitco Mining with me, Paul Harris, here at the 2026 Mining Forum Americas in Colorado Springs.
• 0:19
  SPEAKER_00: Joining me now is Jamie Beck, president and CEO of London Gold.
• 0:23
  SPEAKER_00: Jamie, welcome back to Kitco.
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  SPEAKER_00: Thanks, Paul.
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  SPEAKER_00: Jamie, you're an a geologist, so I want to get straight into the exploration.
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  SPEAKER_00: You've got one of the largest ever exploration programs at FDM Fruto del Norte in Ecuador, and some of the results have been very, very eye-watering indeed.
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  SPEAKER_00: 108 grams per ton over 11.75 meters, 236 grams per ton over 3.95 meters.
• 0:47
  SPEAKER_00: Wow, it must be wonderful being a geologist overlooking all of these results.
• 0:52
  SPEAKER_01: It's just uh such an incredible deposit, Paul.
• 0:55
  SPEAKER_01: You know, the the original discovery of Frutos del Norte, and now finding those types of grades and thicknesses outside of that uh mining area as we move to the south.
• 1:07
  SPEAKER_01: New discovery that we're calling Corbrada Dorada, which is about eight kilometers on strike from Fruto del Norte, uh, that was just released a couple of weeks ago, and and uh that was another 13 meters of six and a half grams.
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  SPEAKER_01: So uh this this whole sort of structural district continues to surprise and surprise to the upside.
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  SPEAKER_00: Very much so.
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  SPEAKER_00: How do these results compare to the original Fruto del Norte project where you're looking at producing around 500,000 ounces a year this year?
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  SPEAKER_01: Yeah, it's it's uh they're a little bit different.
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  SPEAKER_01: Fruto del Norte was uh incredibly unique in that we just had such consistent thicknesses, we would have 30, 40, 50 meter intersections of high grade gold.
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  SPEAKER_01: What we're seeing at FDN South has actually been areas of of higher grades.
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  SPEAKER_01: We've had 500, 600 gram uh intersections over mineable widths.
• 2:02
  SPEAKER_01: Uh but we are seeing that it's sort of slightly narrower, maybe a little higher grade.
• 2:08
  SPEAKER_01: Uh so it'll it'll just change uh when we get there, change our our mining method a little bit.
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  SPEAKER_00: Okay.
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  SPEAKER_00: As I mentioned, you've got one of the biggest exploration programs underway that's ever been on the project.
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  SPEAKER_00: What are the aims of that exploration program?
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  SPEAKER_01: Threefold.
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  SPEAKER_01: Uh number one is always replacing reserves.
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  SPEAKER_01: So uh we have a bit of a 25,000 meter program focused on conversion drilling.
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  SPEAKER_01: That's looking at FDN East, FDN South, and trying to convert uh depletion uh back into reserves that we can add into the mine plan for for next year.
• 2:41
  SPEAKER_01: And that that's been incredibly successful at FDN throughout the years.
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  SPEAKER_01: We started mining in 2019 with about a 5 million ounce reserve.
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  SPEAKER_01: Uh we've now mined over 3 million ounces from the deposit, and today we sit with a 6 million ounce reserve.
• 2:56
  SPEAKER_01: So we've been really successful at conversion.
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  SPEAKER_01: Uh our second objective has been near mine exploration, and this is largely split between uh epithermal gold-silver exploration uh as well as an emerging copper, copper gold porphyry district.
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  SPEAKER_01: So we we're actually spending a fair bit of exploration dollars looking for copper, and we've been successful.
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  SPEAKER_01: Uh and then there's a small portion, we're doing about 8,000 meters of drilling uh on our regional program.
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  SPEAKER_01: And these are targets further away from FDN on on a much uh bigger land package.
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  SPEAKER_01: We we hold about 65,000 hectares.
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  SPEAKER_01: Uh to date, we've only really ever explored the Lazarza concession, which is around 6,500 hectares.
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  SPEAKER_01: So there's a huge land package that remains unexplored, and and we're gonna start poking a few holes into that this year.
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  SPEAKER_00: Now, Frutto del Norte, the mine, is generating incredible free cash flow.
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  SPEAKER_00: So in some ways, money is no object, but obviously you've got to be disciplined in how you spend that, how you invest that.
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  SPEAKER_00: So uh how how are you how do you sort of plan the sort of capital program, the expenditure program for the exploration?
• 3:59
  SPEAKER_01: Yeah, yeah, yeah.
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  SPEAKER_01: Our capital return policy corporately has been incredibly successful.
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  SPEAKER_01: We we have about 50% of free cash flow that we uh dedicate directly to uh capital returns through our fixed and variable dividend.
• 4:15
  SPEAKER_01: Um but that still leaves us lots of opportunity outside of that to uh invest in the exploration.
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  SPEAKER_01: That's and that's really how we look at it.
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  SPEAKER_01: This is investment in our in our future, and and so far the discovery costs uh for nuances that we've been able to bring into the mine plan are incredibly competitive.
• 4:32
  SPEAKER_01: Um so it's uh it's not hard to spend money when you're finding uh gold and you're finding gold that's being brought into the mine plan.
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  SPEAKER_00: Thank you.
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  SPEAKER_00: Now, as as we mentioned, you've been delivering some of the best drill results in the company's history.
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  SPEAKER_00: What is the a realistic timeline perhaps to convert uh FDN East, FDN South into reserve and resource update and then into a mine plan?
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  SPEAKER_01: So we're looking at uh an expansion to the plant.
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  SPEAKER_01: Uh we'll come out to the market later this year with sort of full details around the scope and scale of that, but uh it'll sort of be in the order of 6,500 to 7,000 tons per day.
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  SPEAKER_01: We're currently operating at around 5,500 tons per day.
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  SPEAKER_01: And uh as as these deposits uh, you know, we're no longer mining the the 12, 13 grams uh per ton that we did when FDN first started.
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  SPEAKER_01: And so this plant expansion alongside of uh the development work that we've been putting in to access FDN South and FDN East is going to allow us to keep that plant uh full at the higher capacity and really maintain, call it half a million ounce production profile uh for a very, very uh significant amount of time.
• 5:45
  SPEAKER_01: I think uh much longer than sort of is currently on paper with our reserve base.
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  SPEAKER_01: So that's the idea, a success through exploration, the expanded plant to uh compensate for a little bit of a declining grade profile, but uh that will that will keep our production levels consistent and keep our cash flow consistent throughout the years.
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  SPEAKER_00: So even Fruto del Norte suffers from declining grade profiles.
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  SPEAKER_00: At some point we have to go back to to reserve grade.
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  SPEAKER_00: Yeah.
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  SPEAKER_00: Okay.
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  SPEAKER_00: Um so that plant expansion from about five and a half thousand tons per day to six and a half thousand tons a day.
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  SPEAKER_00: What's the potential timeline for that?
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  SPEAKER_00: What's the potential cost for that?
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  SPEAKER_01: Yeah, we're we're working on that now.
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  SPEAKER_01: We we hope to have that work largely completed uh through 2027 so that it's uh up and up and running in in full speed by 2028.
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  SPEAKER_01: Uh capital costs still being uh finalized, so we'll come out with a number later this year.
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  SPEAKER_00: Okay.
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  SPEAKER_00: Um obviously a high gold price is very beneficial to the business, but we're in an environment where it's been a difficult year in costs, cost escalation.
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  SPEAKER_00: Um, tell me a little bit about how things are on the ground in Ecuador because uh Ecuador power costs have been a critical issue.
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  SPEAKER_00: The government has said that any new mine development has to build its own power supply um with shipping costs increasing around the world.
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  SPEAKER_00: Imagine that's potentially having an impact on some of uh bringing materials and uh consumables into the country.
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  SPEAKER_00: Um how how how how are things on the ground?
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  SPEAKER_01: You know, we we benefit from being a small high-grade underground mine.
• 7:17
  SPEAKER_01: Uh so while we have uh, as the industry has seen uh some cost pressures on increasing increase.
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  SPEAKER_01: I mean you brought up uh energy and uh you know we're now uh seeing that affect our diesel prices.
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  SPEAKER_01: But at the end of the day, simply because of how much diesel we use, this is not a big uh open pit mine that's moving a ton of material on a day-to-day basis.
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  SPEAKER_01: So uh, you know, we're sort of seeing two to three percent increases in OpEx.
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  SPEAKER_01: Uh and we've been relatively insulated from um sort of broader cost pressure.
• 7:50
  SPEAKER_01: Ecuador, of course, is dollarized, so everything's done in US dollars, anyways.
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  SPEAKER_01: We haven't seen huge uh labor inflation there.
• 7:58
  SPEAKER_01: So uh it's it's been definitely manageable, and and we've seen our costs really stay within our uh all in sustaining cost guidance, and and and we're optimistic that we'll continue to hit that uh you know throughout this year.
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  SPEAKER_01: So uh nice to be high grade underground in in this environment.
• 8:16
  SPEAKER_01: It uh it insulates us a little bit from uh from those increases for sure.
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  SPEAKER_01: On the power side, we actually signed a super unique deal uh in Ecuador, a power purchase agreement with a third-party hydroelectric provider.
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  SPEAKER_01: Uh so we'll be sourcing all of our power uh direct uh from them.
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  SPEAKER_01: It's not a uh a line that that connects them to FDN.
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  SPEAKER_01: What they do is they put that power into the grid, and then we get credit for it when we pull it out.
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  SPEAKER_01: So uh we've been moving towards uh let's call it self-sufficiency and power generation, and uh that has a fixed uh power cost and a long-term contract associated with it, which has been uh a great great news story.
• 8:59
  SPEAKER_00: South America is uh beginning to experience quite a severe El Nina event, and for for people that are unaware of what that means, it typically means very, very dry weather drought, and that can potentially impact um the availability of river systems and and as a consequence hydro power systems.
• 9:18
  SPEAKER_00: Um do you anticipate any issues related to that?
• 9:21
  SPEAKER_00: We do, yeah.
• 9:22
  SPEAKER_00: Okay, and so what how mitigation measures can be a lot of different things?
• 9:25
  SPEAKER_01: Yeah, we we uh you know certainly hope hope that their uh the weather systems cooperate and Ecuador is able to um to maintain sort of power supply.
• 9:34
  SPEAKER_01: Uh but it's a political issue, as you can imagine.
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  SPEAKER_01: Uh the government doesn't want to have blackouts at at people's homes, that kind of thing.
• 9:42
  SPEAKER_01: And and we've seen this in the past when the weather's not particularly cooperated, uh, where the company's been asked to curtail power consumption a little bit.
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  SPEAKER_01: Fortunately, we've got uh full backup power in terms of diesel generators, so that ends up being a slightly higher cost option, obviously, because we're consuming diesel and we're generating our own power, but it's not a risk to the operation.
• 10:02
  SPEAKER_01: So we'll be able to keep going uh should uh that Mother Nature not cooperate and uh and there needs to be some curtailment there, but we're we're comfortable in the in the backup plan that's in place.
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  SPEAKER_00: So that's a cost rather than an availability.
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  SPEAKER_00: Exactly.
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  SPEAKER_00: Okay.
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  SPEAKER_00: Now the company recently reported that there is a dispute with Ecuador over the sovereign adjustment.
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  SPEAKER_00: Um let's start off.
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  SPEAKER_00: What is the sovereign adjustment?
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  SPEAKER_00: What is disputed, and will that impact potentially other years as well?
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  SPEAKER_01: So the sovereign adjustment is a really unique mechanism in Ecuador that ensures that that 50% of the benefit of the project goes to the state, and 50% of the benefit goes to the company.
• 10:44
  SPEAKER_01: Um this uh uh it applies to natural resources throughout Ecuador, so the oil and gas industry and as well as ourselves.
• 10:53
  SPEAKER_01: Um but it it's likely that lending gold and Fruit del Norte will be the first time in Ecuador's history that the sovereign adjustment actually gets triggered and and is payable.
• 11:04
  SPEAKER_01: So you can imagine there's a series of complex calculations that go into exactly how that works.
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  SPEAKER_01: But you know, in simple terms, Paul, imagine sort of two buckets starting.
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  SPEAKER_01: Uh, when we were investing in capital and exploration, our our bucket drained.
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  SPEAKER_01: You know, we were investing in the company and and Ecuador was gaining taxes and royalties, and then we started producing.
• 11:26
  SPEAKER_01: Uh, now we're making revenues and we're catching up.
• 11:29
  SPEAKER_01: And at some point in time that you know that those two buckets uh meet, let's call it.
• 11:34
  SPEAKER_01: Um so what we're arguing over is is when that uh time actually happens, and uh it's it's calculations that are buried into our exploitation agreement.
• 11:45
  SPEAKER_01: I'm not surprised that there's going to be discrepancies.
• 11:48
  SPEAKER_01: Uh it's done on a present value basis, so you actually have to take historical investments and move them into$2026.
• 11:56
  SPEAKER_01: Um, and small changes in the calculation can have uh bigger impact.
• 12:01
  SPEAKER_01: So uh, you know, we remain optimistic that we'll be able to work with the government and continue to discuss and have dialogue as to how we sort of settle um the you know the disagreements, but uh we're trying to isolate that as as a as a simple disagreement over uh that calculation, no impact to uh how we view Ecuador, our commitment to moving projects forward, our commitment to investing in in the country, the relationship remains uh fantastic.
• 12:26
  SPEAKER_00: Thank you for that sort of quite neat uh way of describing what happens uh or what what it's all about.
• 12:31
  SPEAKER_00: So continuing that metaphor, then if if the you know both buckets of full or the equal height, then presumably going forward, that sovereign adjustment is going to be uh an annual payment that the company may pays to the government of Ecuador.
• 12:44
  SPEAKER_00: Yeah, that's correct.
• 12:46
  SPEAKER_00: Brilliant.
• 12:46
  SPEAKER_00: Um let's end, Jamie, looking at um you said the first production was in 2019.
• 12:52
  SPEAKER_00: Wow, seven years.
• 12:53
  SPEAKER_00: That seems uh to have gone very, very quickly.
• 12:56
  SPEAKER_00: The growth of the company, you've obviously got a lot of growth on the ground nearby, food in the north, uh, Fruit of the Northeast, South, East, and some other areas.
• 13:04
  SPEAKER_00: Um are you looking beyond what you have in Ecuador in terms of potential future growth of the company?
• 13:12
  SPEAKER_01: Uh you know, always uh first and foremost is the organic growth pipeline.
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  SPEAKER_01: Uh, not only on the on the gold side, but on the copper side.
• 13:21
  SPEAKER_01: We've made these big uh copper gold porphyry discoveries.
• 13:24
  SPEAKER_01: We anticipate coming out with an inaugural mineral resource estimate for Sandia, which is the uh sort of the most advanced that sits to the uh northeast of FDN, about two kilometers away.
• 13:37
  SPEAKER_01: Uh look to that for call it Q127, um, maybe if we're lucky uh by the end of this year.
• 13:44
  SPEAKER_01: So that's exciting that will prove some you know copper growth, and and copper will form a part of our uh growth pipeline in the future, unquestionably.
• 13:52
  SPEAKER_01: Um so anything we look at then needs to compete against that uh organic growth uh opportunities that we have internally.
• 13:59
  SPEAKER_01: The nice thing is we we've got uh such robust growth that uh nothing's pressing.
• 14:05
  SPEAKER_01: It's not like there's a uh a production cliff that's falling away that we need to uh to to try and backfill through some MA, which allows us to be patient and uh and take our time and find something that that is potentially the right fit if we were to look externally.
• 14:21
  SPEAKER_00: Within the broader London group, there's obviously a lot of copper experience.
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  SPEAKER_00: You know, prior to London Gold, you were running the Filo del Filodel Sur project in Salto, Argentina.
• 14:33
  SPEAKER_00: With the potential copper project within London Gold, would that be a London gold development?
• 14:38
  SPEAKER_00: Would that perhaps be a joint venture with one of the other London companies?
• 14:42
  SPEAKER_01: I guess we'll see.
• 14:44
  SPEAKER_01: Uh right now it sits so close to our existing facilities that you know we'll we'll take our time and evaluate the opportunity and just sort of understand size, scale, quantum, economics, uh, and then yeah, there's all sorts of unique and creative ways to surface value, whether that's develop them ourselves, try and partner with expertise within the broader Londine group or externally or or other alternatives that we think will be beneficial for shareholders.
• 15:10
  SPEAKER_00: Well, congratulations on uh putting out some very, very attractive and very, very good uh gold drill results.
• 15:16
  SPEAKER_00: Jamie Beck, thank you very much for joining me today.
• 15:18
  SPEAKER_00: Thanks, Paul.
• 15:19
  SPEAKER_00: And we have a lot more to come from the 2026 Mining Forum Americas in Colorado Springs.
• 15:24
  SPEAKER_00: So stay tuned and hit that subscribe button.
• 15:26
  SPEAKER_00: I'm Paul Harris, and this is KitCo Mining.
• 15:29
  SPEAKER_02: KitCo Mining on site coverage of Mining Forum Americas is presented by Metalla Royalty and streaming.