Lundin Gold’s recent drilling activities at the Fruta del Norte (FDN) mine are pointing towards significant resource growth opportunities, according to mining analyst Jeremy Hoy from Canaccord Genuity Capital Markets. In a note to clients on Thursday, Hoy expressed optimism about the company’s exploration success and highlighted the potential for adding and converting current resources.
Building on the momentum of its near-mine exploration targets at FDN, Lundin Gold recently announced a positive reserve and resource update in February. The company expanded its drill program for the second time this year, bringing the total to 50,000 meters. The FDN mine currently boasts impressive resources, with 32.2 million tonnes grading 8.21 grams of gold per tonne, equivalent to 8.5 million ounces of gold. Additionally, it has reserves of 17.98 million tonnes grading 8.68 grams of gold per tonne, totaling 5.02 million ounces of gold. With its high-grade nature, FDN is considered one of the top operating gold mines globally.
Lundin Gold’s near-mine program is actively exploring individual sectors within the FDN deposit and its extensions along major controlling structures. As of the end of October, the company has drilled approximately 26,361 meters across 46 holes, both underground and from the surface. Earlier this year, drilling successfully identified a new exploration target named Bonza Sur. The results have shown the presence of a new epithermal system located only 1 kilometer south of the FDN deposit. Lundin Gold believes that this new mineralization is hosted by the same volcanic sequence as FDN.
The domain of the epithermal system extends 850 meters in a north-south direction, with a minimum depth of 500 meters in the central area. Notable results from the near-mine exploration include hole BLP-2023-042, which encountered 7.44 grams of gold per tonne over 8.8 meters from a depth of 620.2 meters, including a section with 34.68 grams of gold per tonne over 1.8 meters. Another significant result is from hole BLP-2023-048, which intersected 5.87 grams of gold per tonne over 11.9 meters from a depth of 168.4 meters, including a section with 14.39 grams of gold per tonne over 4 meters.
Continued drilling at Bonza Sur over the coming months will focus on gaining a better understanding of the zone by testing the envelope at greater depths and along the strike. Currently, two drilling rigs are dedicated to this target.
In parallel to the Bonza Sur exploration, Lundin Gold has completed its underground conversion drill program at FDN. This program specifically targeted the inferred resources within the FDN deposit. Over 79 drill holes and a distance of 11,233 meters, a comprehensive dataset has been collected. The results from this program will contribute to an updated reserve and resource estimate, expected to be released in early 2024.
Significant findings from the underground conversion program include hole FDN-C23-062, which intercepted 48.5 meters grading 6.92 grams of gold per tonne from a depth of 50.6 meters. Within this section, there is a subsection of 8.7 meters grading an impressive 22.88 grams of gold per tonne. Another noteworthy result is from hole FDN-C23-048, which encountered 37.9 meters grading 6.49 grams of gold per tonne from a depth of 123.3 meters, including a section with 6.6 meters grading 12.59 grams of gold per tonne.
Switching gears, Lundin Gold recently released its production report for the quarter ending September 30. The company reported gold production of 112,711 ounces compared to 121,635 ounces in the same quarter of the previous year. The slight decrease in production can be attributed to a drop in the average gold recovery rate from 90.3% to 86.5%, which was partially offset by an increase in average throughput. Despite this, Lundin Gold remains on track to meet its 2023 production guidance of 450,000 to 485,000 ounces of gold from FDN.
Given the positive outlook for Lundin Gold and its ongoing exploration success at FDN, Jeremy Hoy from Canaccord Genuity Capital Markets has maintained his ‘buy’ rating on the stock. Currently trading at C$16.84, Hoy has a price target of C$20.25 for the company. Lundin Gold’s market capitalization currently stands at C$4 billion ($2.9 billion).